{"id":1973,"date":"2021-08-18T14:09:40","date_gmt":"2021-08-18T14:09:40","guid":{"rendered":"https:\/\/phphouses.com\/blog\/?p=1973"},"modified":"2021-08-18T14:09:40","modified_gmt":"2021-08-18T14:09:40","slug":"real-estate-still-lack-supply-not-lack-demand","status":"publish","type":"post","link":"https:\/\/phphouses.com\/blog\/real-estate-still-lack-supply-not-lack-demand\/","title":{"rendered":"Real Estate: It\u2019s Still a Lack of Supply, Not a Lack of Demand"},"content":{"rendered":"
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Real Estate: It\u2019s Still a Lack of Supply, Not a Lack of Demand<\/p><\/div>\n

One of the major questions real estate experts are asking today is whether prospective homebuyers still believe purchasing a home makes sense. Some claim rapidly rising home prices are impacting demand and, by extension, leading to the recent slowdown in sales activity.<\/p>\n

However, demand isn\u2019t the real issue. Instead, it\u2019s the lack of supply (homes available for sale). An article from the\u00a0Wall Street Journal<\/em><\/a>\u00a0shows this is true for new home construction:<\/p>\n

\u201cHome builders have sold more homes than they can build<\/strong>. Now they are limiting their sales in an effort to catch up.\u201d<\/em><\/p><\/blockquote>\n

The article quotes David Auld, CEO of\u00a0D.R. Horton Inc.<\/em>\u00a0(the largest homebuilder by volume in the United States since 2002), explaining how they don\u2019t have enough homes for the number of buyers coming into their models:<\/p>\n

\u201cThrough our history, to have somebody walk into our models and to tell them,\u00a0\u2018We don\u2019t have a house for you to buy today\u2019,<\/strong>\u00a0is something that is foreign to us.\u201d<\/em><\/p><\/blockquote>\n

Danielle Hale, Chief Economist for\u00a0realtor.com<\/em>, also explains that, in the existing home sale market, the slowdown in sales was a supply challenge, not a lack of demand. Responding to a recent uptick in listings coming to market,\u00a0she notes<\/a>:<\/p>\n

\u201c. . . if these changing inventory dynamics continue, we could see\u00a0a wave of real estate activity<\/strong>\u00a0heading into the latter part of the year.\u201d<\/em><\/p><\/blockquote>\n

Again, the buyers are there. We just need houses to sell to them.<\/p>\n

If the slowdown in sales was the result of demand waning, we would start to see home prices beginning to moderate \u2013 but this isn\u2019t the case. As Mark Fleming, Chief Economist for\u00a0First American<\/em>,\u00a0explains<\/a>:<\/p>\n

\u201cThere\u2019s a lot of conversation around rising prices and falling quantity in the housing market, and there\u2019s this concept, or this idea, that it\u2019s a demand-side problem . . . . But, if demand were falling dramatically, we would actually see less price pressure, less home price growth.\u201d<\/em><\/p><\/blockquote>\n

Instead, we\u2019re seeing price appreciation accelerate throughout this year, as evidenced by the year-over-year percentage increases reported by\u00a0CoreLogic<\/em><\/a>:<\/p>\n